Professional Documents
Culture Documents
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Write your name, Centre number and candidate number on the answer sheet in the spaces provided
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There are thirty questions in this paper. Answer all questions. For each question, there are four
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Read very carefully the instructions on the answer sheet.
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© CIE 2002 [Turn over
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2 When preparing a sole trader’s annual accounts, no adjustments were made for closing amounts
prepaid.
4 In the cash book of a company the bank account showed a credit balance of $5000. There were
unpresented cheques amounting to $1500. The bank statement showed bank charges of $700 not
in the cash book.
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A debentures
B preference shares
C prepaid expense
D proposed dividend
7 There is great uncertainty about the continuance of a business. This has caused the proprietor to
make a large reduction in the valuation of the year-end stock.
A going concern
B matching
C materiality
D substance over form
8 The table shows information from the books of a business at 30 April 2002.
invoiced $
Credit sales invoiced during financial year 79 000
Goods sent to customers on 28 April 2002 and invoiced 4 May 2002 6 100
Goods sent to customers during April 2002 on sale or return basis 8 300
but not sold by 30 April 2002
What is the amount to be credited to the Trading Account as sales for the year ended 30 April
2002?
$
Total of sales day book understated 500
Discounts allowed not entered in Sales Ledger Control account 1 200
Bad debts written off not recorded in Sales Ledger Control account 400
Provision for bad debts 2 500
10 The trial balance of a business does not agree. The difference has been entered in a Suspense
account.
The error was caused by a cheque for $400 from Omar being debited to Omar’s account.
11 On 6 January 2002 a firm lost all its stock in a fire. Stock had a Balance Sheet valuation of
$650 000 on 31 December 2001.
In the period 1–5 January 2002 purchases were $75 000 and sales were $96 000.
The average gross profit the firm makes is 25% of selling price.
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A land
B an oil well
C a quarry
D a revalued property
13 Under which heading should negative Goodwill be included in a company’s Balance Sheet?
A capital reserves
B intangible fixed assets
C revenue reserves
D share capital
14 Which of the following transactions would appear in both the Receipts and Payments account and
the Income and Expenditure account of a cricket club?
$
1 June 2001 Final dividend for the year ended 31 March 2001 40 000
1 December 2001 Interim dividend for the year ended 31 March 2002 15 000
1 June 2002 Final dividend for the year ended 31 March 2002 50 000
What are the entries for dividends in the Profit and Loss Appropriation Account for the year ended
31 March 2002 and the Balance Sheet at that date?
16 How should the revaluation of a fixed asset be treated in a cash flow statement?
$
ordinary shares of $0.50 each, fully paid 320 000
cash at bank 100 000
February 2002 A one-for-two rights issue of ordinary shares of $0.50 each at $1.10.
The issue was fully subscribed.
April 2002 A bonus issue of one for four ordinary shares of $0.50 each.
Assume no other transactions took place between 31 December 2001 and 30 April 2002.
What were the balances of the Ordinary Share Capital and Bank accounts on 30 April 2002?
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20 A business has a gross profit to sales ratio of 40%, and a net profit to sales ratio of 10%.
If the sales volume increases by 8% which of the following will generally be true?
22 A company’s stock turnover ratio is calculated using the cost of goods sold and the average of
opening and closing stocks.
In each of the last two financial years, closing stock was valued at $5000 more than the
corresponding opening stock.
In both years, the stock turnover was ten times and in the earlier year the cost of goods sold was
$125 000.
$
debtors 6000
bank overdraft 1500
cash in hand 50
creditors 5050
$
direct materials 1.20
direct labour 0.80
factory overhead (fixed) 1.40
royalty payment 1.00
administration overhead (fixed) 0.60
25 A company manufactures a variety of products, each of which requires different materials and
grades of labour.
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27 A company manufactures a single product with a selling price of $30 per unit. Based on production
and sales of 4000 units, costs are:
$ 000
direct costs 48
variable production overhead 10
fixed production overhead 20
variable selling overhead 5
fixed administration overhead 17
total costs 100
28 Which line, A, B, C or D, in the graph below best represents the behaviour of the total cost of an
item affected by bulk purchase discounts?
cost
$
quantity purchased
29 Which graph shows the fixed cost per unit produced in a manufacturing process?
A B
0 0
quantity produced quantity produced
C D
0 0
quantity produced quantity produced
30 A department undertakes a one-off process manufacturing calculators. At the end of the month,
the production is 1000 units, of which 200 units are complete and 800 units are 25% complete.
production costs $
direct costs 60 000
indirect costs 30 000
departmental overheads 10 000
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